Airline profits "the cost of a sandwich"

Airline profits "the cost of a sandwich"
By admin


The average profit per passenger for the world’s airlines is barely enough to buy a sandwich, the industry’s governing body has said, as robust growth in demand fails to filter through to the bottom line.

Worldwide demand for international air travel climbed 5.7% in May, led by the emerging markets of Africa, Latin America and the Middle East. But the International Air Transport Association (IATA) said the growth is having little impact on profits.

Airlines will make combined profits of US$12.7 billion in 2013 on revenues of $711 billion, IATA said.

“That’s a 1.8% net profit margin or around $4 profit for every passenger,” director general and chief executive Tony Tyler said. “The average profit per passenger is just enough to buy a sandwich in most parts of the world.

"Demand for air travel continues to be strong despite less than robust economic indicators in some key markets, a further demonstration of the importance of air transport. But that importance does not carry through to the bottom line."

In Asia Pacific, loads slipped in May as capacity hikes outstripped the rise in demand.

Traffic rose 3.7% but with capacity climbing 5.5%, aircraft had more empty seats with loads falling 1.3 percentage points to 74.1%.

IATA said the Asia Pacific performance was a result of declining business confidence in major Asian economies and a slowdown in “growth momentum”.

China GDP in particular did not meet expectations in the first quarter, the aviation body said.

The Middle East had the greatest year-on-year growth of 11.7%, but loads slipped 0.7 points to 73.5% after capacity climbed almost 13%.

European carried recorded 5.6% growth, North America was up 3%, Africa climbed almost 10% and Latin America saw a near-8% rise in demand.

“Global economic performance remains a concern, however, demand for air travel continues to expand,” Tyler said. “The business environment has also improved compared to mid-2012 with some indications of easing weakness in the Eurozone. It’s still a tough environment but there are reasons for optimism in the second half of the year.”

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